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Health care expenditure and income in the OECD reconsidered: Evidence from panel data

  • Baltagi, Badi H.
  • Moscone, Francesco

This paper reconsiders the long-run economic relationship between health care expenditure and income using a panel of 20 OECD countries observed over the period 1971-2004. In particular, the paper studies the non-stationarity and cointegration properties between health care spending and income. This is done in a panel data context controlling for both cross-section dependence and unobserved heterogeneity. Cross-section dependence is modelled through a common factor model and through spatial dependence. Heterogeneity is handled through fixed effects in a panel homogeneous model and through a panel heterogeneous model. Our findings suggest that health care is a necessity rather than a luxury, with an elasticity much smaller than that estimated in previous studies.

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Article provided by Elsevier in its journal Economic Modelling.

Volume (Year): 27 (2010)
Issue (Month): 4 (July)
Pages: 804-811

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Handle: RePEc:eee:ecmode:v:27:y:2010:i:4:p:804-811
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/30411

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